Mustang Bio, Inc 8-K, filed May 22, 2023
Mustang Bio, Inc. (MBIO)
About this 8-K
Mustang Bio, Inc filed this 8-K on May 22, 2023, reporting on events of May 17, 2023.
Items reported
- Item 1.01: Entered into a material agreement
- Item 1.02: Ended a material agreement
- Item 2.05: Exit or restructuring costs
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
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WASHINGTON, D.C. 20549
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CURRENT REPORT
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Item 1.01. | Entry into a Material Definitive Agreement. |
Sale of Worcester Cell Processing Facility
On May 18, 2023, Mustang Bio, Inc. (the “Company”) entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with uBriGene (Boston) Biosciences, Inc., a Delaware corporation (“uBriGene”), pursuant to which the Company has agreed, subject to the terms and conditions therein, to sell its leasehold interest in its cell processing facility located in Worcester, Massachusetts (the “Facility”) and associated assets relating to the manufacturing and production of cell and gene therapies at the Facility to uBriGene (the “Transaction”). As consideration for the Transaction, uBriGene has agreed to pay to the Company a total purchase price of $11,000,000, consisting of a base amount of $6,000,000 (the “Base Amount”) and a contingent amount of $5,000,000 (the “Contingent Amount”). The Base Amount shall be paid to the Company upon closing; the Contingent Amount shall be paid to the Company upon its issuance of equity securities in an amount equal to or greater than $10,000,000 after the closing (the “Contingent Capital Raise”). If the Company is unable to close the full amount of the Contingent Capital Raise within two years following the closing, uBriGene will no longer be obligated to pay the Contingent Amount to the Company.
The Asset Purchase Agreement contains customary representations and warranties from both the Company and uBriGene with respect to each party and, with respect to the Company, its operations and the Facility. The Asset Purchase Agreement also contains customary covenants, including covenants by the Company, subject to certain exceptions, during the interim period between the execution of the Asset Purchase Agreement and the consummation of the Transaction, to use commercially reasonable efforts to maintain and preserve intact the Facility and associated assets and preserve the rights, goodwill and relationships with its employees, customers, lenders, suppliers, regulators and others in connection with the Facility. In addition, under the Asset Purchase Agreement, uBriGene has agreed to (or cause one of its affiliates to) offer employment (to be effective on the closing date of the Transaction) to no less than forty Company employees who support operations at the Facility on terms with base salary or hourly wages, target bonus opportunities (excluding equity-based compensation) and retirement and welfare benefits that are no less favorable than those provided by the Company immediately prior to the closing of the Transaction (such employees, “Offered Employees”).
The closing of the Transaction is subject to a number of conditions, including:
· | the consent and approval of the landlord of the Facility, WCS-377 Plantation Street, Inc. (“Landlord”), of either (i) an assignment and assumption agreement to be executed by the Company and uBriGene pursuant to which uBriGene would assume the Company’s lease of the Facility or (ii) a new lease agreement by and between uBriGene and Landlord with respect to the Facility on terms and conditions acceptable to uBriGene (the “Site Lease Transition Condition”); and |
· | four employees identified as “key role employees,” having accepted employment with uBriGene (or its applicable affiliate) effective as of the closing date of the Transaction (the “Offered Employees Condition”). |
In addition, the closing of the Transaction is subject to other customary closing conditions including, among other things, the accuracy of the representations and warranties subject to certain materiality qualifications, the material compliance by the parties with their respective covenants and the absence of any law or order prohibiting the consummation the transaction.
The Asset Purchase Agreement provides that the closing date (the “Closing Date”) shall take place on the date that is five business days after the satisfaction of all conditions to closing, provided, however, that if the date upon which all conditions to closing are satisfied is on or before June 2, 2023, the Closing Date shall be no sooner than ten business days following such date.
The Asset Purchase Agreement provides customary termination rights and indemnification rights to each of the parties, including a termination right if the transaction is not consummated by June 30, 2023 (the “Outside Date”), subject to certain limitations. If the only condition to closing of the Transaction that remains unsatisfied as of the Outside Date (other than conditions which, by their nature, are to be satisfied on the Closing Date) is the Site Lease Transition Condition, the Outside Date may be mutually extended by the parties in 30-day increments. If the Asset Purchase Agreement is terminated due to either party’s willful material breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made pursuant to the Asset Purchase Agreement, such party shall pay $1,000,000 to the other party within 30 days of such termination. Under the Asset Purchase Agreement, each of the Company and uBriGene have agreed to use commercially reasonable efforts to take such actions as are necessary to expeditiously satisfy the conditions to closing the Transaction.
The Asset Purchase Agreement has been filed as an exhibit to this Current Report on Form 8-K to provide investors and stockholders with information regarding its terms. It is not intended to provide any other factual information about the parties to the Asset Purchase Agreement or any of their respective affiliates. The representations, warranties and covenants contained in the Asset Purchase Agreement were made only for the purposes of such agreement and as of specified dates, were solely for the benefit of the parties to the Asset Purchase Agreement and may be subject to limitations agreed upon by the parties. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Asset Purchase Agreement instead of establishing these matters as facts and may be subject to standards of materiality applicable to the parties that differ from those appliable to investors. Investors are not third-party beneficiaries under the Asset Purchase Agreement. In addition, the assertions embodied in the representations and warranties contained in the Asset Purchase Agreement are qualified by information in a confidential disclosure schedule the parties have exchanged. Accordingly, investors should not rely on the representations, warranties and covenants contained in the Asset Purchase Agreement or any descriptions thereof as characterizations of the actual state of facts or condition of either of the parties or of any of their respective affiliates.
Voluntary Notice to U.S. Committee on Foreign Investment in the United States
uBriGene is an indirect, wholly owned subsidiary of UBrigene (Jiangsu) Biosciences Co., Ltd., a Chinese contract development and manufacturing organization. Under the Asset Purchase Agreement, the Company and uBriGene shall, and shall cause their respective affiliates to, use their reasonable best efforts to obtain clearance for the Transaction from the U.S. Committee on Foreign Investment in the United States (“CFIUS”), although obtaining such clearance is not a condition to closing the Transaction. In accordance with the Asset Purchase Agreement, the Company and uBriGene expect to file a joint voluntary Notice (the “Notice”) with CFIUS no later than June 1, 2023. Following filing of the Notice, CFIUS initiates a 45-day review to prepare an assessment of potential threats to U.S. national security and identify national security concerns. At the end of this review period, if CFIUS determines there are no unresolved national security concerns, CFIUS will apprise the parties of its determination and action on the matter will be concluded. If CFIUS identifies national security concerns during the initial review period, it will conduct a subsequent 45-day investigation, during which CFIUS may identify and impose mitigation measures before the Transaction is permitted to move forward. Upon completion of the investigation, if CFIUS determines to conclude all deliberative action on the Notice without sending a report to the President, CFIUS will apprise the parties of its determination and action on the matter will be concluded. Depending on the nature and severity of perceived national security risks identified during its investigation, CFIUS may, among other mitigation measures, require suspension of the Transaction, require uBriGene to divest the Facility or other assets relating thereto or forfeit contracts that CFIUS deems to be sensitive or require appointment of special compliance personnel or a proxy board consisting of U.S. persons. Because clearance of the Transaction from CFIUS is not a condition to closing, the Closing Date of the Transaction may occur before CFIUS makes its final determination with respect to the Notice submitted by the parties. If CFIUS determines to require mitigating measures with respect to the Transaction, then uBriGene must comply with such measures after the Closing Date.
Manufacturing Services Agreement, Quality Services Agreement and Transition Services Agreement
The Asset Purchase Agreement contemplates that the parties will enter into a Manufacturing Services Agreement (the “Manufacturing Services Agreement”), a related Quality Services Agreement (the “Quality Services Agreement”) and a Transition Services Agreement upon closing of the Transaction. Pursuant to the Manufacturing Services Agreement, uBriGene will manufacture the Company’s lead product candidates, including MB-106, and the Company will commit to spend at least $8,000,000 over a period of two years after the closing of the Transaction to purchase manufacturing and related services (the “Manufacturing Services”) from uBriGene (the “Minimum Commitment”). The Company will pay uBriGene 25% of the Minimum Commitment at the time of signing of the Manufacturing Services Agreement and the remainder of the Minimum Commitment over the following two years. Subject to the Company’s payment of its Minimum Commitment, uBriGene will provide to the Company a manufacturing rebate, payable in cash at the end of the second year of the Manufacturing Services Agreement term, for any amounts paid for Manufacturing Services in excess of the Minimum Commitment (but in no event will such rebate exceed $3,000,000). In connection with the Manufacturing Services Agreement, the Company will provide uBriGene with the customary licenses to use intellectual property rights specific to the Company’s cell and gene therapies to the extent reasonably necessary for uBriGene’s performance under the Manufacturing Services Agreement. The Company anticipates that, pursuant to the arrangements under the Manufacturing Services Agreement, uBriGene will be able to provide the Company with necessary manufacturing capacity for the continued development of its lead product candidates.
In connection with the Manufacturing Services Agreement, the Company and uBriGene will enter into a Quality Services Agreement, pursuant to which the Company and uBriGene will agree to specified duties for each party with respect to the contract manufacture by uBriGene of the Company’s product candidates. The Quality Services Agreement will set forth the quality activities associated with production, analysis, and release of such products and will assign responsibility for each activity to the Company and/or uBriGene.
Under the Transition Services Agreement, the Company will provide certain transitional services to uBriGene to ensure the smooth transition of operations and continuity of business for a period of six months after closing, unless otherwise extended upon the mutual agreement of the Company and uBriGene.
The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the agreement, a copy of which is attached hereto as Exhibit 1.1, and is incorporated herein by reference.
Item 1.02. | Termination of a Material Definitive Agreement. |
Following a review of its portfolio of product candidates to determine the future strategy of its programs and the proper allocation of its resources, the Company determined to discontinue development of its MB-102 (CD123), MB-103 (HER2), MB-104 (CS1) and MB-105 (PSCA) programs (collectively, the “Discontinued Programs”), comprising a portion of the Company’s portfolio of chimeric antigen receptor (“CAR”) engineered T cell (“CAR T”) therapies being developed by the Company in partnership with the City of Hope National Medical Center (“City of Hope” or “COH”). On May 17, 2023, in connection with this determination, the Company terminated the agreements listed below. The Company will not incur any early termination penalties in connection with the termination of such agreements.
MB-102 (CD123) Program—Amended and Restated Exclusive License Agreement, dated as of February 17, 2017, by and between the Company and COH (the “CD123 Technology License”): Under the CD123 Technology License, the Company received an exclusive worldwide license from COH for the use of the CD123 Patent Rights, which are being investigated as a target for adoptive cellular immunotherapy for blastic plasmacytoid dendritic cell neoplasm.
MB-104 (CS1) Program—Amended and Restated Exclusive License Agreement, dated as of August 13, 2021, by and between the Company and COH (the “CS1 Technology License”): Under the CS1 Technology License, the Company received an exclusive worldwide license from COH for the use of CS1-specific CAR T technology, which is being applied in the treatment of multiple myeloma.
MB-103 (HER2) Program—Amended and Restated Exclusive License Agreement, dated as of August 13, 2021, by and between the Company and COH (the “HER2 Technology License”): Under the HER2 Technology License, the Company received an exclusive worldwide license from COH for the use of HER2 CAR T technology, which is being applied in the treatment of glioblastoma multiforme and in the treatment of HER2+ cancers that have metastasized to the brain.
MB-105 (PSCA) Program—Amended and Restated Exclusive License Agreement, dated as of August 13, 2021, by and between the Company and COH (the “PSCA Technology License,” and together with the CS1 Technology License and the HER2 Technology License, the “Technology License Agreements”): Under the PSCA Technology License, the Company received an exclusive worldwide license from COH for the use of prostate stem cell antigen (“PSCA”) CAR T technology, which is being applied in the treatment of PSCA+ metastatic castration-resistant prostate cancer.
The termination of each of the Technology License Agreements is effective as of June 16, 2023. The foregoing summary is qualified in its entirety by reference to the applicable Technology License Agreement. The CD123 Technology License was filed as an Exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 31, 2017. The CS1 Technology License, the HER2 Technology License and the PSCA Technology License were filed as Exhibits to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2021, filed with the SEC on August 16, 2021.
Item 2.05. | Costs Associated with Exit or Disposal Activities. |
As part of the discontinuation of the Discontinued Programs and in connection with the sale of the Facility to uBriGene, the Board approved a reduction in the Company’s workforce by approximately 82% (inclusive of the Offered Employees). The Company’s Board reasonably expects that the Offered Employees will accept employment with uBriGene (or one of its affiliates) on terms with base salary or hourly wages, target bonus opportunities (excluding equity-based compensation) and retirement and welfare benefits that are no less favorable than those provided by the Company immediately prior to the closing of the Transaction. This workforce reduction is expected to be completed by the end of the second quarter of 2023.
Terminated employees who do not receive offers of employment from uBriGene (or one of its affiliates) will be offered separation benefits, including, but not limited to, severance payments, temporary healthcare coverage assistance and payments for all earned but unused vacation time. Employees who receive and accept offers of employment from uBriGene (the “Transferred Employees”) will retain their restricted stock units, which otherwise would have been forfeited upon termination of employment with the Company, on an amended vesting schedule and will receive a payment in an amount equal to their prorated annual bonus through the Closing Date. In connection with these actions, the Company will incur expenses of approximately $2.9 million, consisting of (i) severance and termination-related costs of approximately $2.1 million, which will be paid in cash during the quarter ended June 30, 2023 and (ii) the recognition of approximately $0.8 million of non-cash expenses in connection with the amended vesting of the Transferred Employees’ restricted stock units. These estimates are subject to a number of assumptions, and actual results may differ.
The Company expects to realize approximately $24 million in annualized operating savings from the transactions and arrangements described above, including savings relating to the Facility, clinical operations and Discontinued Programs.
Item 8.01. | Other Events. |
XSCID Program
Based on a review of the data from the investigator-sponsored clinical trials of the gene therapy for X-linked severe combined immunodeficiency (“XSCID”) that has been licensed to the Company pursuant to the Exclusive License Agreement, dated as of August 2, 2018 (as amended, the “XSCID License Agreement”) by and between the Company and St. Jude Children’s Research Hospital, Inc. (“St. Jude”), enrollment to these trials has been paused. The Company awaits data from new investigator-sponsored trials to test a modified version of the current lentiviral vector prior to initiating the Company’s sponsored trials. No safety concerns in the trials utilizing the current vector have been noted to date, and no insertional mutagenesis or malignancy has been detected in either of the two investigator-sponsored trials. However, the Company has decided to delay initiating its own sponsored trials out of an abundance of caution, and expects to provide more information on timelines once it has had the opportunity to review data from the planned trials utilizing the modified vector. The delayed start of the Company’s multicenter trials for XSCID will allow the Company to utilize the safest known vector in its clinical trials. The Company expects to enter into an amendment to the XSCID License Agreement in order to modify applicable development milestones in accordance with the foregoing.
Press Release
On May 18, 2023, the Company issued a press release related to its (i) its entry into the Asset Purchase Agreement in connection with the sale of the Facility, (ii) determination to discontinue the Discontinued Programs and (iii) updates with respect to its XSCID programs. A copy of the press release is attached as Exhibit 99.1 to this report and is incorporated by reference herein.
Nasdaq Minimum Bid Price Compliance
As previously disclosed, on May 24, 2022, the Company received a letter from the Listing Qualifications Staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) indicating that the bid price of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), had closed below $1.00 per share for 30 consecutive business days and, as a result, the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2), which sets forth the minimum bid price requirement for continued listing on The Nasdaq Capital Market. In order to regain compliance with Nasdaq Listing Rule 5550(a)(2), the Company was required to maintain a minimum closing bid price of $1.00 or more for at least 10 consecutive business days.
This requirement was met on April 18, 2023, the tenth consecutive business day when the closing bid price of the Common Stock was over $1.00. On April 19, 2023 the Company received a letter from the Staff notifying the Company that it had regained compliance with Nasdaq Listing Rule 5550(a)(2), and the matter is now closed.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
The following exhibits are furnished herewith:
Exhibit |
| Description |
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1.1 | | |
99.1 |
| Press release issued by Mustang Bio, Inc., dated May 18, 2023 |
104 |
| Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
| | |
* | | Portions of this Exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. |
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Current Report on Form 8-K are forward-looking statements. Forward looking statements can be identified by the use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” target,” “will,” “would,” “could,” “should,” “continue,” and other similar expressions. The Company’s forward-looking statements, include, among others, statements about the Company’s expectations with respect to the consummation of the sale of its manufacturing facility and its ability to fund its operations, including continued investment in its research and development pipeline; the Company’s anticipated savings and expenses relating to the consummation of the sale of the Facility; the discontinuance of its MB-102, its CD-123-targeted CAR T cell therapy, as well as its HER2-, CS1- and PSCA-targeted CAR T cell therapy programs, the postponing of the MB-107 and MB-207 pivotal trials and the related reduction in the Company’s workforce; and the Company’s plans and timeline regarding its XSCID program. Actual events or results may differ materially from those described in this Current Report on Form 8-K due to a number of risks and uncertainties. Risks and uncertainties include, among other things, risks related to the satisfaction of the conditions to closing the Transaction—including the conditions specifically described in this Current Report on Form 8-K—in the anticipated timeframe or at all; whether uBriGene is able to successfully perform its obligation to produce the Company’s products under the Manufacturing Services Agreement on a timely basis and to acceptable standards; whether the Company is able to raise $10 million in gross proceeds from equity raises following the closing of the Transaction and receive the contingent portion of the consideration for the sale of the Facility to uBriGene; whether the Company’s expenses are as predicted; disruption from the transaction making it more difficult to maintain business and operational relationships; negative effects of the announcement or the consummation of the Transaction on the market price of the Company’s common stock; significant transaction costs; the development stage of the Company’s primary product candidates and the related risks involved in drug development, clinical trials and the uncertainties around regulatory reviews and approvals; whether CFIUS determines to require mitigating actions which may include suspension or termination of the Transaction or the imposition of operating mechanisms that could make it more difficult for uBriGene to operate the Facility; if the Transaction closes before CFIUS issues its final determination, whether CFIUS later determines to require the sale of the Facility by uBriGene, which may jeopardize the Company’s access to products manufactured at the Facility; other business effects, including the effects of industry, market, economic, political or regulatory conditions; as well as other risks described in Part 1, Item 1A, “Risk Factors,” in the company’s Annual Report on Form 10-K, filed on March 30, 2023, subsequent Quarterly Reports on Form 10-Q and our other filings with the Securities and Exchange Commission (the “SEC”). The forward-looking statements in this Current Report on Form 8-K represent the Company’s views as of the date of this Current Report on Form 8-K. The Company anticipates that subsequent events and developments will cause its views to change. However, while it may elect to update these forward-looking statements at some point in the future, it has no current intention of doing so except to the
extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing the Company’s views as of any date subsequent to the date of this Current Report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Mustang Bio, Inc. | |
| (Registrant) | |
Date: May 22, 2023 |
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| By: | /s/ Manuel Litchman, M.D. |
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| Manuel Litchman, M.D. |
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| President and Chief Executive Officer |
Exhibit 1.1
Execution Version
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
MustAng Bio, INC.,
AND
UBRIGENE (BOSTON) BIOSCIENCES INC.,
Dated as of May 18, 2023
TABLE OF CONTENTS
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TABLE OF CONTENTS
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Exhibits
Exhibit A | Bill of Sale and Assignment and Assumption Agreement |
Exhibit B | IP Employee Assignments |
Exhibit C | Manufacturing Services Agreement |
Exhibit D | Quality Services Agreement |
Exhibit E | Site Lease Transition |
Exhibit F | Transition Services Agreement |
Exhibit G | Employment Agreements |
Schedules
Schedule 1.01(a)Current Assets
Schedule 1.01(b)Permitted Liens
Schedule 2.02(a)(ii)Real Property
Schedule 2.02(a)(iii)Personal Property Leases; Personal Property and Equipment
Schedule 2.02(a)(iv)Contracts
Schedule 2.02(a)(vi)Licenses; Permits
Schedule 2.02(c)(viii)Excluded Contracts
Schedule 2.02(c)(x)Additional Excluded Assets
Schedule 2.04(a)Closing Consents
Schedule 3.03(a)Liens
Schedule 3.04Governmental Authorizations
Schedule 3.05Financial Statements
Schedule 3.06Non-Contravention
Schedule 3.08(a)Material Contracts
Schedule 3.09(a)Transferred Operations IP
Schedule 3.09(b)Seller IP Contracts
Schedule 3.11(a)Site Employees
Schedule 3.11(b)Non-Employee Workers
Schedule 3.11(c)Labor and Employee Matters
Schedule 3.12(a)Plans
Schedule 3.12(o)Site Employee Payments
Schedule 3.14Absence of Certain Developments
Schedule 3.17(a)Tax Matters
Schedule 3.20Affiliate Transactions
Schedule 3.21Inventory
Schedule 4.02Non-Contravention
Schedule 4.03Governmental Authorizations
Schedule 4.07Legal Proceedings
Schedule 6.02Indemnification Matters
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of May 18, 2023, by and between uBriGene (Boston) Biosciences Inc., a Delaware corporation (“Buyer”) and Mustang Bio, Inc., a Delaware corporation (“Seller”).
W I T N E S S E T H:
WHEREAS, Seller desires to sell all of the Transferred Assets (as defined below) to Buyer except for the Excluded Assets (as defined below) and Buyer desires to acquire such Transferred Assets on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in view of the foregoing premises and in consideration of the mutual covenants, agreements, representations and warranties herein contained, the parties hereto agree as follows:
“Accounting Firm” shall mean a nationally recognized accounting firm mutually agreed upon by the parties that has not been retained by either party within the two (2) years prior to the date of engagement of the Accounting Firm hereunder.
“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“Affiliate” with respect to any Person shall mean any entity that is directly or indirectly controlling, controlled by or under common control with such Person. For purposes of this definition, “control” of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise and, in any event and, without limitation of the previous sentence, any Person owning more than fifty percent (50%) or more of the voting securities of another Person shall be deemed to control that Person. The term “Affiliate” or “Affiliates” also includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, of such Person.
“Ancillary Agreements” shall mean, other than this Agreement, the agreements and instruments (including the Bill of Sale and Assignment and Assumption Agreement, the IP Employee Assignments, the Transition Services Agreement, the Manufacturing Services Agreement, Quality Services Agreement, Site Lease Transition, and the Employment Agreements) executed and delivered in connection with the transactions contemplated by this Agreement.
“Assumed Liabilities” shall mean only the contractual obligations, liabilities and commitments of Seller under all Transferred Contracts but only to the extent that such obligations, liabilities and commitments are required to be performed after the Closing Date and excluding any obligations, liabilities or commitments arising from any non-performance, breach or default by Seller.
“Bill of Sale and Assignment and Assumption Agreement” shall mean that certain Bill of Sale and Assignment and Assumption Agreement among Seller and Buyer, appended to this Agreement as Exhibit A.
“Business Day” shall mean any day other than (i) a Saturday, (ii) a Sunday or (iii) any day on which banks in Worchester, Massachusetts or Vancouver, British Colombia are authorized or obligated by law or executive order to close.
“Buyer” has the meaning set forth in the Preamble.
“Buyer Specified Representations” shall mean Section 4.01 (Organization; Power; Execution), Section 4.02 (Non-Contravention), Section 4.03 (Governmental Authorizations), and Section 4.04 (Brokerage Fees).
“CARES Act” means the Coronavirus Aid, Relief and Economic Security Act, as signed into law by the President of the United States on March 27, 2020.
“CFIUS” means the Committee on Foreign Investment in the United States.
“CFIUS Clearance” means (a) that CFIUS has issued a written notice to the parties that the Buyer’s acquisition of Transferred Assets is not a “covered transaction” and that it is not subject to review under the DPA; (b) CFIUS has delivered written notice to the parties that it has concluded its review or investigation of the Buyer’s acquisition of Transferred Assets, determined that there are no unresolved national security concerns, and that all action under the DPA with respect to the Buyer’s acquisition of Transferred Assets is concluded; or (c) CFIUS has sent a report to the President of the United States requesting the President’s decision and either (A) the President has announced a decision not to take any action to suspend, prohibit or place any limitations on the Transaction or (B) the President has not announced a decision to take any action to suspend or prohibit the Transaction within fifteen (15) days after the earlier of (x) the date upon which CFIUS has completed its investigation of the Transaction or (y) the date on which CFIUS has referred the Transaction to the President for action.
“CFIUS Notice” means a voluntary notice submitted to CFIUS pursuant to 31 C.F.R. §800.501 with respect to Buyer’s acquisition of Transferred Assets.
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“Chinese Governmental Approval” shall mean any consent, approval, order or authorization of, or registration, declaration or filing by or with the People’s Republic of China or any Governmental Entity governed by the People’s Republic of China, in each case as required under the laws of the People’s Republic of China in effect as of the date of this Agreement, or any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with the People’s Republic of China or any Governmental Entity governed by the People’s Republic of China, in each case as required under the laws of the People’s Republic of China in effect as of the date of this Agreement.
“Closing Certificate” has the meaning set forth in Section 2.03(b).
“Closing Indebtedness” shall mean the Indebtedness of Seller as of immediately prior to the Closing.
“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.
“Contingent Capital Raise” shall mean the issuance by Seller of equity securities in an amount equal to or greater than $10,000,000 to third parties after the Closing Date, which such issuance may occur in a single transaction or a series of transactions.
“Contract” has the meaning set forth in Section 2.02(a)(iv).
“Current Assets” shall mean current assets of the Transferred Operations as of the close of business on the Closing Date, determined in accordance with GAAP, and are included in the line items set forth on Schedule 1.01(a).
“Damages” shall mean losses, liabilities, damages, deficiencies, obligations, diminution in value, costs and expenses and any and all claims, demands or suits by any Person, including without limitation the costs and expenses of any and all actions, suits, proceedings, demands, assessments, judgments, settlements and compromises (and, if applicable, reasonable attorneys’ fees associated therewith) relating to the breach or alleged breach of this Agreement, but shall exclude any punitive, incidental or consequential damages, except to the extent paid or payable to a third party pursuant to a Third Party Claim.
“Data” means data, databases, information and compilations related to the Transferred Assets, including all collections of data, whether machine readable or otherwise, and all past or present customer lists, supplier lists, mailing lists, subscriber lists, advertiser lists, market surveys, sales data, marketing data, advertising materials, marketing materials, promotional materials, brochures, catalogues, literature and forms.
“Data Breach” means (i) any loss of, damage to, or unauthorized access to, acquisition of, use of or disclosure of, any Data, (ii) any damage to, or unauthorized access to or use of, any IT Systems or networks, (iii) any other security incident involving Data or IT Systems or networks, or (iv) a business email compromise incident or similar incident involving a transfer of funds to an unauthorized party.
“Disclosure Schedules” shall mean the schedules referenced in, or otherwise provided in connection with, Article III of this Agreement and, in each case, as attached hereto.
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“Dollars” or “$” means the lawful currency of the United States.
“DPA” means Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. §4565, and all rules and regulations thereunder, including those codified at 31 U.S.C. Part 800 et. seq.
“Employment Agreement” means the applicable form of employment agreement or employment offer letter and other employment related agreements in the forms attached hereto as Exhibit G.
“Environmental Claim” shall mean any claim, action, cause of action or written notice alleging potential liability arising under any Environmental Law, or arising out of or resulting from circumstances forming the basis of any violation of any Environmental Law.
“Environmental Law” shall mean applicable federal, state or local Law relating to pollution or protection of the environment, public health or worker safety or health, the Release or threatened Release of Hazardous Materials into the environment, or the presence, use, storage, generation, handling, production, transportation, treatment, disposal, distribution, labeling, testing, processing, air emission, discharge, control or clean-up of any Hazardous Materials, in each case related to the Transferred Assets.
“E-Verify” means an Internet based system operated by the Department of Homeland Security (DHS) in partnership with the Social Security Administration (SSA) that allows participating employers to electronically verify the employment eligibility of their newly hired employees. Information and the registration process are found at the E-Verify website: https://e-verify.uscis.gov/enroll.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that is treated as a single employer with Seller under Section 414(b), (c), (m), or (o) of the Code.
“Excluded Assets” has the meaning set forth in Section 2.02(c).
“Excluded Contracts” has the meaning set forth in Section 2.02(c)(viii).
“Excluded Liabilities” shall mean all of the liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise, of the Seller and its Affiliates that are not Assumed Liabilities and, for the avoidance of doubt, shall include, without limitation, the following: (i) all liabilities arising from the Transferred Operations or ownership of the Transferred Assets prior to the Closing, including any action, omission, event or occurrence prior to the Closing, (ii) all liabilities under Environmental Law arising from the operation of the Transferred Operations or ownership of the Transferred Assets prior to the Closing, (iii) all Indebtedness (except to the extent included as Assumed Liabilities), (iv) all Transaction Expenses, (v) all liabilities pertaining to the Excluded Contracts, (vi) all liabilities (including additional required contributions or administrative fees), Taxes, or penalties relating to, associated with, or arising out of any Plan of the Seller and the termination thereof, (viii) all liabilities related to compensation, benefits, compliance with employment-related Laws and similar obligations with respect to any Transferred Employees arising prior to and/or upon the Closing; (viii) all liabilities with respect to
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any Seller employees and other service providers who are not Transferred Employees; (ix) all liabilities with respect to Seller’s Plans, and (x) all Excluded Taxes.
“Excluded Taxes” shall mean any and all liabilities for the following Taxes, in each instance regardless of whether any such Taxes are reflected or shown as due or payable on any Tax Return, and regardless of whether any such Taxes are assessed, payable or due prior to, on or after the Closing Date: (i) any and all Taxes imposed on or payable by the Seller and its respective Affiliates, regardless of the Tax period to which such Taxes relate; (ii) any and all Taxes imposed on or payable in respect of the Transferred Operations or any of the Transferred Assets, or for which the Transferred Operations or any of the Transferred Assets may be liable, assessed or subject, in each instance to the extent such Taxes are attributable to any Pre-Closing Tax Period or to any Pre-Closing Straddle Period; (iii) any and all Taxes of any Person imposed on or payable in respect of the Transferred Operations or any of the Transferred Assets, whether by Contract or pursuant to any Law or otherwise, which Taxes relate to an event or transaction occurring on or prior to the Closing Date; and (iv) any and all Taxes arising from, or incurred or payable in connection with or relating to, the consummation of the transactions contemplated by this Agreement, including any Transfer Taxes.
“Financial Statements” shall mean with respect to the Transferred Operations, (i) the unaudited balance sheets and the related unaudited statements of income and unaudited statements of cash flows for the years ended December 31, 2021 and December 31, 2022 and (ii) the unaudited balance sheet as of March 31, 2023, and the related unaudited statement of income and statement of cash flows for the three-month period then ended (the “Most Recent Financial Statements”). The balance sheet of the Transferred Operations, as applicable, as of the date of the Most Recent Financial Statements is referred to herein as the “Year End Balance Sheet” and the balance sheet of the Transferred Operations, as applicable, as of the date of the Most Recent Financial Statements is referred to as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”.
“Fraud” means, with respect to a party, an actual and intentional misrepresentation of a material existing fact with respect to the making of any representation or warranty in any Transaction Document, made by such party (i) with respect to Seller, to Sellers’ Knowledge, or (ii) with respect to Buyer, to Buyer’s knowledge, of its falsity and made for the purpose of inducing the other party to act, and upon which the other party justifiably relied with resulting Damages.
“GAAP” shall mean generally accepted accounting principles in the United States of America, as amended from time to time.
“Governmental Approval” means any consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity.
“Governmental Entity” shall mean any applicable supranational, national, federal, provincial, state or local judicial, legislative, executive, administrative or regulatory agency or other governmental authority (or any department, agency or political subdivision thereof).
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
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“Hazardous Materials” means any chemicals, materials, toxic, hazardous, explosive or radioactive substances, pollutants, contaminants, or wastes, including, without limitation, those that are now or ever have been defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” or other words of similar import under any Environmental Law, or that are regulated pursuant to or for which liability or standards of care are imposed under any Environmental Law, including any petroleum or petroleum products/distillates, radioactive materials, asbestos in any form, lead based paint, mold, mildew, radon gas, infection or medical wastes, chlorinated solvents, polychlorinated biphenyls, and per- and polyfluoroalkyl substances.
“Income Tax” (and, with the correlative meaning, “Income Taxes”) means any Tax that is based on, or computed with respect to, net income or earnings, gross income or earnings, capital or, net worth (and any franchise Tax or other Tax in connection with doing business imposed in lieu thereof) and any related penalties, interest and additions to Tax.
“Indebtedness” shall mean, without duplication, all obligations or other liabilities of Seller related to the Transferred Assets at Closing: (i) for borrowed money (whether or not evidenced by bonds, debentures, notes or other similar instruments or debt securities); (ii) in respect of letters of credit, bankers’ acceptances or other similar instruments or reimbursement obligations with respect thereto; (iii) to pay the deferred purchase price of any asset, property or right, including earn-outs, payments under non-compete agreements and seller notes; (iv) under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases; (v) under an interest rate, currency or other swap, cap, floor or collar agreement, hedge agreement, forward contract or other similar instrument or agreement, or foreign currency hedge, exchange, purchase or similar instrument or agreement (including any termination or breakage fees); (vi) created or arising under any conditional sale or other title retention agreement; (vii) all obligations secured by Liens on the property of Seller related to or arising under the Transferred Operations; (viii) any liabilities that are guaranteed or assured, directly or indirectly, by Seller related to or arising under the Transferred Operations; (ix) under any mortgage, deed of trust, indenture, security agreement or other agreement securing any of the foregoing obligations; (x) any payroll Taxes deferred pursuant to the CARES Act or other applicable Law; (xi) accrued but unpaid Taxes related to the Transferred Assets and Transferred Operations; (xii) any amounts owed by Seller to fund any deferred compensation arrangements, (xiii) all earned, accrued or otherwise payable but unpaid bonuses, including any non-regular bonus arrangements entered into prior to the Closing, such as signing bonuses, commissions or other contingent compensation owed to any current or former employee, officer, director, independent contractor or other service provider of Seller (including Seller’s portion of any related Taxes), (xiv) any “success fees” or bonuses, phantom equity payments, or severance payments (including, without limitation, all severance obligations payable) arising from or otherwise triggered by the transactions contemplated by this Agreement (including the employer’s share of payroll Taxes attributable thereto), (xv) any accrued vacation or other paid time off as of immediately prior to the Closing; (xvi) all principal, interest, premiums, penalties, breakage fees, costs and expenses, whether accrued or otherwise, with respect to obligations or other liabilities of the types described in clauses (i) through (xv) above; and (xvii) with respect to any unfunded pension or welfare plan.
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“Intellectual Property” means all of the following whether arising under the Laws of the United States or of any other jurisdiction: (i) patents, patent applications (including patents issued thereon) and statutory invention registrations, including reissues, divisions, continuations, continuations in part, extensions and reexaminations thereof, all rights therein provided by international treaties or conventions, (ii) Trademarks, (iii) Internet domain names and websites, (iv) copyrightable works, works of authorship, copyrights, moral rights, mask work rights, database rights and design rights, in each case, whether or not registered, and registrations and applications for registration thereof, and all rights therein provided by international treaties or conventions, (v) confidential and proprietary information, trade secrets, formulas, designs, technology, inventions, methods, processes, compositions, customer lists, processes, product formulations and know-how, and (vi) all improvements to, licenses or other rights to any of the foregoing; and all related applications and registrations therefor.
“Inventory” shall mean all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories of the Transferred Operations.
“IP Employee Assignments” shall mean the proprietary rights and invention assignment agreements entered into as of the Closing Date by and between the Buyer and those individuals set forth on Schedule 2.04(d), appended to this Agreement as Exhibit B.
“IRS” means the U.S. Internal Revenue Service.
“IT Systems” has the meaning set forth in Section 3.22(c).
“Judgment” shall mean any judgment, order, writ, injunction, ruling, decision, award or decree of a Governmental Entity.
“Key Role Employees” shall mean [***].“Knowledge of Seller” and “Seller’s Knowledge” shall mean the actual knowledge of [***]. For purposes of this Agreement, any such individual shall be deemed to have knowledge of a particular fact or other matter if such individual is actually aware of such fact or other matter.
“Landlord” shall mean WCS-377 Plantation Street, Inc.
“Law” or “Laws” shall mean, collectively, any applicable United States and non-U.S. federal, state or local statute, law, treaty, order, directed duty, authorization, ordinance, rule, regulation, decree, permit, concession, franchise, license, restriction, principle of common law, administrative or judicial precedent or authority, code or Judgment issued by any Governmental Entity, including the interpretation or administration thereof by any Governmental Entity charged with the enforcement, interpretation or administration thereof.
“Lien” shall mean any mortgage, pledge, lien (statutory or other), charge, preference, priority or security interest, easement, encumbrance, bailment, hypothecation, assignment, deposit arrangement, deed of trust, conditional sales and title retention agreement (including any lease in the nature thereof), charge or other similar arrangement or interest in real or personal property.
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“Manufacturing Services Agreement” shall mean the manufacturing services agreement entered into as of the Closing Date by and between the Buyer and Seller, appended to this Agreement as Exhibit C.
“Material Adverse Effect” shall mean any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (i) the Transferred Operations, results of operations, condition (financial or otherwise) or assets of the Transferred Operations (ii) the value of the Transferred Assets or (iii) the ability of Seller or Buyer to consummate the transactions contemplated hereby on a timely basis; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (a) general business, industry or economic conditions; (b) general political or social conditions, including the engagement (whether new or continuing) by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, sabotage, or the occurrence of any military or terrorist attack, any pandemic (including COVID-19 or similar SARS respiratory virus or illness), natural or man-made disaster or act of God; (c) changes in financial, banking, or securities markets (including any disruption thereof or any decline in the price of any security or any market index), or any change in prevailing interest rates; (d) changes in accounting rules (including GAAP); (e) changes in applicable Laws; (f) any action required or permitted by the this Agreement, subject to customary exceptions; or (g) the public announcement, pendency or completion of the transactions contemplated by this Agreement; provided further, however, that any event, occurrence, fact, condition or change referred to in the foregoing clauses shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Transferred Operations compared to other participants in the industries in which the Transferred Operations operates.
“Non-Assignable Asset” has the meaning set forth in Section 2.02(d).
“Outside Date” shall mean June 30, 2023, provided that, in the event the only condition to the obligations of each party under this agreement that remains unsatisfied as of the Outside Date (other than conditions which, by their nature, are to be satisfied on the Closing Date) is the receipt of Landlord’s approval and consent to the Site Lease Transition pursuant to Section 6.01(a), the Outside Date may be mutually extended by the parties in thirty (30) day increments.
“Payoff Amount” means the amount of Indebtedness that Buyer shall pay or cause to be paid at Closing to the holders of such Indebtedness by wire transfer of immediately available funds in accordance with the applicable Payoff Letters.
“Payoff Letters” has the meaning set forth in Section 2.03(b).
“Permitted Liens” shall mean (i) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business for amounts not yet due or payable and for which (and only to the extent that) adequate reserves (as determined in accordance with GAAP, consistently applied) have been established on the Financial Statements with respect thereto, (ii) Liens for Taxes and other governmental charges that are not yet due and payable, (iii) Liens arising under equipment leases with third parties entered into in the ordinary course of
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business and included as a Transferred Contract; (v) other imperfections of title or Liens, if any, that have not, and would not, be materially adverse to the Transferred Operations; and (vi) any Liens identified on Schedule 1.01(c).
“Person” shall mean an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity or a Governmental Entity.
“Plan” means any pension, profit-sharing, savings, retirement, and any other, written or oral employment, severance, termination, executive compensation, incentive compensation, deferred compensation, bonus, equity, phantom equity or other equity-based compensation, change in control, retention, salary continuation, vacation, sick leave, disability, death benefit, group insurance, hospitalization, medical, dental, life, employee loan, educational assistance or fringe benefit plan, program, agreement, arrangement, policy, program, practice or other employee benefits or remuneration of any kind, that Seller or any ERISA Affiliate sponsors, maintains, participates in, contributes to or is required to contribute to, or as to which Seller or any ERISA Affiliate has or may have any liability, contingent or otherwise, whether formal or informal, statutory or contractual, funded or unfunded with respect to any current or former employee of or other service provider to the Transferred Operations.
“Post-Closing Straddle Period” has the meaning set forth in Section 5.10(b).
“Pre-Closing Straddle Period” has the meaning set forth in Section 5.10(b).
“Pre-Closing Tax Period” shall mean (a) all taxable periods ending on or prior to the Closing Date, and (b) with respect to a Straddle Period, the portion of any such taxable period ending on (and including) the Closing Date.
“Privacy and Security Laws” means all federal, state or international Laws relating to the collection, use, disclosure, transfer, storage, protection, maintenance, transmission, encryption, access to or privacy or security of, “personally identifiable information,” “personal data”, “sensitive personal information” or “personal information” or any other information that, whether on its own or together with any other information, could be used to identify, contact or locate any individual. The term “Privacy and Security Laws” also includes all Laws relating to (i) Data or systems breach notification and (ii) marketing to, communicating with and collecting payments from the Seller’s customers.
“Privacy and Security Requirements” means, in each case, related to the Transferred Operations, (i) all applicable Privacy and Security Laws, (ii) all Contracts to which the Seller is a party or otherwise bound for the use, privacy or security of Data, IT Systems or financial transactions, (iii) all applicable industry security standards (including, to the extent applicable, the Payment Card Industry Data Security Standard, as amended from time to time) relating to the security or integrity of Data, IT Systems or financial transactions, and (iv) the Data Protection Policies.
“Product Claims” shall mean any claims made by a third-party for product liability, recalls, construction defects or warranties arising directly from work performed by the Seller prior to the Closing related to the Transferred Assets.
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“Product IP” means any and all Intellectual Property relating to Seller’s Excluded Operations and not primarily used for the purposes of the Transferred Operations.
“Quality Services Agreement” shall mean the quality services agreement entered into as of the Closing Date by and between the Buyer and Seller, appended to this Agreement as Exhibit D.
“Real Property” means all interests in real property including fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon, owned, leased, licensed or primarily used by the Transferred Operations, together with any additions thereto or replacements thereof.
“Release” shall mean any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or property.
“Representatives” shall mean, with respect to a party, such party’s Affiliates and their respective directors, managers, officers, employees, attorneys, accountants, representatives, financial advisors, lenders, other sources of debt financing, consultants and other agents.
“Restricted Territory” shall mean all geographic areas within the United States of America.
“Seller Privacy Policy” means each external or internal, past or present privacy policy of the Seller related to the Transferred Operations, including any policy relating to: (i) the privacy of users of any Seller website used for the Transferred Operations; (ii) the collection, storage, disclosure, and transfer of any Data related to the Transferred Operations; or (iii) any Site Employee information related to the Transferred Operations.
“Seller Specified Representations” shall mean the representations and warranties of the Seller set forth in Section 3.01 (Organization and Good Standing), Section 3.02 (Authority), Section 3.03 (Title to Tangible Property; Assets of the Transferred Operations), Section 3.06 (Non-Contravention), Section 3.15 (Brokerage Fees), Section 3.17 (Tax Matters) and Section 3.18 (Capitalization).
“Site” means the first floor of the facility located at 377 Plantation Street, Worcester, Massachusetts 01605, as described in more detail in the Site Lease.
“Site Employee” means any individual that serves the Transferred Operations in any employment-related capacity.
“Site Lease” means the real property lease by and between Seller and Landlord dated October 27, 2017, as amended.
“Site Lease Security Deposit Amount” shall mean an amount equal to $250,000 held by the Landlord pursuant to the terms of the Site Lease.
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“Straddle Period” means any taxable period commencing on or prior to the Closing and ending after the Closing.
“Tax” and “Taxes” shall mean, whether disputed or not, (i) any and all foreign, United States federal, state or local tax, including but not limited to net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, capital, value added, transfer, franchise, profits, excess profits, license, withholding, payroll, employment, FICA, FUTA, social security, unemployment, stamp, excise, escheat, unclaimed property, real property, personal property, intangible property, Inventory, healthcare or healthcare insurance tax, occupation, environmental, escheat, unclaimed property, customs duties, windfall profit tax, customs, duty or other tax, together with any related interest, penalty, addition to tax or additional amount imposed by any applicable Law or Taxing Authority in connection therewith.
“Taxing Authority” shall mean a Governmental Entity having jurisdiction over the assessment, determination, collection, or other imposition of any Tax.
“Tax Return” shall mean any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Termination Fee” shall be an amount equal to $1,000,000.
“Third Party Claim” has the meaning set forth in Section 7.06(a).
“Trademarks” shall include any word, name, symbol, color, designation or device or any combination thereof, whether registered or unregistered, including any trademark, trade dress, service mark, service name, brand mark, trade name, brand name, logo, business symbol, slogan, domain name or other designation of origin, including all goodwill associated therewith, and any and all common law rights, and registrations and applications for registration thereof, all rights therein provided by international treaties or conventions, and all reissues, extensions and renewals of any of the foregoing.
“Transaction Documents” shall mean this Agreement, the Ancillary Agreements and all other documents and certificates required to be delivered hereunder and thereunder.
“Transaction Expenses” shall mean the sum, without duplication, of (i) any unpaid fees, costs and expenses incurred by Seller in connection the negotiation, documentation and consummation of the transactions contemplated by this Agreement and/or the Ancillary Agreements, including all fees, expenses, disbursements and other similar amounts paid to attorneys, financial advisors or accountants of Seller or any other Person that engaged in any due diligence, negotiation or documentation with respect to a potential transaction involving Seller under any expense reimbursement agreement or arrangement or otherwise, (ii) any closing or other transaction fees payable by Seller as a result of the transactions contemplated under this Agreement and/or the Ancillary Agreements, including fees and expenses and other obligations under any engagement letter or other agreement or understanding with any broker, finder or other professional advisors in connection with the transactions contemplated by this Agreement and/or the Ancillary Agreements, (iii) all payments payable by Seller required under any contract or agreement (including those necessary to obtain third party consents) in connection with the
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consummation of the transactions contemplated by this Agreement and/or the Ancillary Agreements and (iv) all change of control, retention, severance benefit, severance or other pay in lieu of notice, bonus, stock appreciation, phantom stock or similar payments due by Seller to any Person, and other accelerations or increases in rights or benefits of the Seller’s employees (whether payable or occurring prior to, on or after the Closing Date), under any plan, agreement or arrangement of Seller, which obligation, in each case, arises either on or before the Closing Date or in whole or in part as a result of the consummation of the transactions contemplated by this Agreement and/or the Ancillary Agreements, including all Taxes that are payable by Seller in connection with or as a result of the payment of such obligations.
“Transition Services Agreement” means that certain Transition Services Agreement between Buyer and Seller dated as of the date hereof.
“Transferred Operations” means the Seller’s operations primarily relating to the manufacturing and production of cell and gene therapies at the Site.
“Transferred Operations IP” means the Data, information, methods, quality management systems, standard operating procedures (including, without limitation, those set forth on Schedule 3.09(a)), and Intellectual Property primarily used for the purposes of the Transferred Operations, as well as the historical facility records for the Site.
“Treasury Regulations” means the regulations issued or proposed under the Code.
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warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the party has not falsely made or breached shall not detract from or mitigate the fact that the party has falsely made or breached the first representation, warranty or covenant. Time periods based on a number of days within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and, if applicable, by extending the period to the next Business Day immediately following if the last day of the period is not a Business Day.
work, promises or undertakings (whether written or oral) (hereinafter “Contracts”) primarily used in the Transferred Operations or any Transferred Asset to the extent set
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forth on Schedule 2.02(a)(iv) (the “Transferred Contracts”) (provided, that, prior to Closing, (i) Buyer may remove contracts from Schedule 2.02(a)(iv) in its discretion, and such removed contracts shall not be considered Transferred Contracts, and, (ii) the parties may mutually agree to add certain contracts to Schedule 2.02(a)(iv), which added contracts shall be considered Transferred Contracts); provided, however, that the Transferred Contracts shall not include any insurance policies for which Seller is the policyholder.
Notwithstanding the foregoing, the transfer of the Transferred Assets pursuant to this Agreement shall not include the assumption of any liability or obligation related to the Transferred Assets or
the Transferred Operations, unless and to the extent such liability or obligation is expressly included in the Assumed Liabilities.
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The Seller represents and warrants to Buyer as follows:
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Agreement, and the Transferred Operations are in compliance with all terms and conditions of such environmental Permits. The Transferred Assets are not subject to any pending Environmental Claim. In addition, no Hazardous Materials have been released on the Site except in compliance of Environmental Laws.
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Buyer represents and warrants to the Seller as follows:
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acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of Buyer under any agreement to which Buyer is a party or to which its properties or assets are subject; or (c) violate or result in a breach of, or constitute a default under any Law or other restriction of any Governmental Entity to which Buyer is subject.
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consummate the transactions contemplated hereby, Buyer has relied solely upon its own investigation and the express representations and warranties of Seller set forth in the Transaction Documents (including related portions of the Disclosure Schedules); and (b) neither Seller nor any other Person has made any representation or warranty as to Seller, the Transferred Operations, the Transferred Assets or this Agreement, except as expressly set forth in the Transaction Documents (including the related portions of the Disclosure Schedules).
The Seller covenants and agrees with Buyer, and Buyer covenants and agrees with the Seller:
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Information and are directed by Seller to hold such Confidential Information in confidence, and Seller shall be responsible for any breach of the confidentiality provisions of this Section 5.06 by its Representatives. If Seller or any of its Representatives are legally required to disclose any Confidential Information, Seller shall (a) promptly notify Buyer and (b) cooperate in Buyer’s efforts to obtain a protective order or other reasonable assurance that confidential treatment will be accorded such Confidential Information. If, in the absence of a protective order, Seller or any of its Representatives is compelled as a matter of Law to disclose Confidential Information to a third party, Seller and its Representatives may disclose to the third party compelling disclosure only the part of such Confidential Information as is required by Law to be disclosed; provided, however, that, prior to any such disclosure, Seller and its Representatives will, to the extent permitted by applicable Law and applicable time restrictions, use good faith efforts to advise and consult with Buyer and its counsel as to such disclosure and the nature and wording of such disclosure.
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between Supply Chain and Finance)) and providing for the orderly transfer of any and all manifestations of Intellectual Property to be transferred or licensed to Buyer hereunder.
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if to Seller, addressed to:
Mustang Bio, Inc.
[***]
[***]
[***]
[***]
[***]
with a copy to:
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
and if to any Buyer, addressed to:
UBriGene (Boston) Biosciences Inc.
[***]
[***]
[***]
[***]
with a copy to:
[***]
[***]
[***]
[***]
[***]
[***]
[***]
or to such other address as any party shall hereafter designate by like notice. Each notice, request, instruction, consent and other communication under this Agreement shall be deemed to have been given or delivered upon receipt thereof by the intended recipient.
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each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement will be determined to be invalid or unenforceable, such provision will be deemed amended to delete therefrom the portion determined to be invalid or unenforceable, such amendment to apply to the extent of such invalidity or unenforceability without affecting in any way the remaining provisions hereof, only with respect to the operation of such provision in the particular jurisdiction in which such determination is made.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
Seller: |
By: /s/ Manuel Litchman, M.D. |
Name: Manuel Litchman, M.D. |
Title: President and Chief Executive Officer |
|
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
BUYER: |
UBRIGENE (BOSTON) BIOSCIENCES INC. |
By:/s/Jian Chen |
Name: Jian Chen |
Title:Director |
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
Exhibit 99.1
Mustang Bio Announces Strategic Manufacturing Partnership and Portfolio Updates
uBriGene (Boston) Biosciences to acquire Mustang Bio’s Worcester manufacturing facility for total consideration of up to $11 million and enters into strategic manufacturing partnership to support MB-106 and future pipeline
Company optimizes resources to focus on advancing lead CD20 CAR T program, GBM program, and in vivo CAR T platform technology from Mayo Clinic
Transaction and partnership with uBriGene, portfolio optimization, restructuring and recent loan repayment expected to significantly reduce annualized operating and interest expense by at least $28 million and ensure focus on data readouts for key programs
Worcester, MA – May 18, 2023 – Mustang Bio, Inc. (“Mustang” or the “Company”) (Nasdaq: MBIO), a clinical-stage biopharmaceutical company focused on translating today’s medical breakthroughs in cell and gene therapies into potential cures for difficult-to-treat cancers and rare genetic diseases, today announced a strategic update, including anticipated milestones for 2023. Mustang intends to optimize the allocation of its resources and focus on MB-106, MB-109, and in vivo CAR T platform technology. Additionally, Mustang announced a partnership with uBriGene (Boston) Biosciences Inc. (“uBriGene”), the U.S. subsidiary of uBriGene Group, a leading cell and gene therapy contract development and manufacturing organization (“CDMO”), which includes the sale of the Company’s development, manufacturing and analytical testing facility in Worcester, Massachusetts to uBriGene.
Under the terms of an asset purchase agreement between Mustang and uBriGene, uBriGene will acquire Mustang’s state-of-the-art clinical- and commercial-scale cell and gene therapy manufacturing facility in Worcester, Massachusetts, for a total consideration of $11 million. This consideration includes $6 million payable upfront plus an additional $5 million payable upon Mustang raising $10 million in gross proceeds from equity raises following the closing of the transaction. The closing of the transaction is subject to the satisfaction of certain conditions, including approval of transfer of the Company’s lease to uBriGene by the owner of the building (an affiliate of the University of Massachusetts Chan Medical School) and the acceptance of offers of employment with uBriGene or its affiliates by certain key current Mustang employees. Subject to satisfaction of conditions, the Company expects the transactions to close in June 2023.
Subject to closing, the parties will enter into a manufacturing supply agreement, under which uBriGene will manufacture Mustang’s lead product candidates, including continuing to support MB-106 manufacturing for the ongoing multi-center Phase 1/2 trial.
Mustang’s Worcester facility is a 27,000 square foot, cutting edge cGMP facility supporting process development, manufacturing and analytical testing, designed with the flexibility to expand and support various cell and gene therapy production requirements and capacities. uBriGene intends to expand the Worcester site’s capabilities while leveraging Mustang’s experienced staff and robust quality and operating systems to manufacture a broader portfolio of advanced modalities. uBriGene will also offer their expertise in preclinical research services and late-stage and commercial manufacturing of advanced therapy products with respect to product and process characterization, and regulatory inspections.
Manuel Litchman, M.D., President and Chief Executive Officer of Mustang, commented, “We are very pleased to have found a great partner for the manufacturing of our CAR T cell and gene therapies, and we believe that this strategic partnership with uBriGene will meet our portfolio manufacturing needs to reach critical upcoming data inflection points, while extending our cash runway. I want to thank our manufacturing team for their dedication in building and growing our Worcester facility since it opened in 2018. While we are optimizing our resources at Mustang, we look forward to continuing to work with many of our colleagues in this new capacity, as our CDMO.”
“This acquisition is important to uBriGene’s commitment to support the development, clinical, and commercial supply of cell and gene therapies to sustain industry demand and provide new CDMO options,” said Alex Chen, President of uBriGene. “We look forward to working together with the University of Massachusetts Chan Medical School and local biotechnology companies to continue to advance the manufacturing ecosystem in the Greater Boston region. This partnership enables us to expand rapidly to create a North American presence and offer the same high-quality cell and gene therapy development and manufacturing capabilities for the U.S. that we currently provide in Asia, including to support Mustang Bio’s lead clinical-stage CAR-T program.”
Mustang Bio Strategic Portfolio Updates
CAR T Cell Therapies
After a review of its portfolio of product candidates to determine the future strategy of its programs and the proper allocation of its resources, Mustang will discontinue development of its MB-102, its CD123-targeted CAR T cell therapy, as well as its HER2-, CS1- and PSCA-targeted CAR T cell therapy programs, comprising a portion of the Company’s portfolio of CAR T cell therapies being developed by the Company in partnership with City of Hope.
Mustang will continue to work with Fred Hutchinson Cancer Center (“Fred Hutch”) to develop MB-106 (CD20-targeted CAR T cell therapy) and with Mayo Clinic to develop its in vivo CAR T platform technology. Mustang will also continue to work with City of Hope and with Nationwide Children’s Hospital on the development of MB-109 (MB-101 CAR T cell therapy targeting IL13Rα2 on malignant glioma cells + MB-108 oncolytic virus to potentially make these tumors more susceptible to killing by the CAR-T cells).
Gene Therapies
Additionally, based on a review of the data from the investigator-sponsored clinical trials of the gene therapy for X-linked severe combined immunodeficiency (“XSCID”) that has been licensed to Mustang Bio, enrollment to these trials has been paused. We await data from new investigator-sponsored trials being planned by our partners that will test a modified version of the current lentiviral vector prior to initiating multicenter Mustang-sponsored trials in both the newborn and previously transplanted patient populations. No safety concerns in the trials utilizing the current vector have been noted to date and no insertional mutagenesis or malignancy has been detected in either of the two investigator-sponsored trials. However, Mustang has made the decision to delay initiating its own sponsored trials out of an abundance of caution, and once we have had the opportunity to review the emerging data from the planned trials utilizing the modified vector, Mustang expects to provide more information on timelines. The delayed start of Mustang’s multicenter trials for XSCID will allow the Company to utilize the safest known vector available in its clinical trials and reduce Mustang’s near-term operating expense.
In addition, in 2023 we look forward to treating a second RAG1-SCID patient with our MB-110 LV-RAG1 ex vivo lentiviral gene therapy in the ongoing investigator-sponsored Phase 1/2 multicenter clinical trial taking place in Europe. Furthermore, we hope to provide an update regarding the research collaboration with Frank J. Staal, Ph.D., from Leiden University to develop additional lentiviral gene therapies.
“Upon completion of a thorough, strategic review of our portfolio of CAR T and gene therapies, it was determined that Mustang’s resources should be focused and allocated to benefit our lead clinical-stage CAR T programs, which could provide potential curative treatment options for certain hematologic cancers and solid tumors, supported by data-to-date. As previously reported, MB-106 continues to demonstrate high efficacy and a favorable safety profile in a Phase 1 investigator-sponsored trial at Fred Hutch, with an overall response rate of 96% and complete response rate of 75% in a wide range of hematologic malignancies, including Waldenstrom macroglobulinemia (“WM”). Given this, Mustang plans
to treat patients with WM in the Phase 1 portion of its multicenter MB-106 clinical trial to support a fast-to-market Phase 2 strategy for this indication, with the first pivotal Phase 2 WM patient potentially to be treated in the first quarter of 2024. Data from the Fred Hutch clinical trial also support the potential of MB-106 to be administered as outpatient therapy and provide a best-in-class immunotherapy option for patients treated previously with CD19-directed CAR T cell therapy. We look forward to data from the Fred Hutch clinical trial to be presented at medical meetings in the second quarter of 2023, and initial data from Mustang’s multicenter clinical trial to be disclosed shortly as well. Phase 1 clinical trials of MB-101 at City of Hope and of MB-108 at the University of Alabama at Birmingham continue to enroll patients with recurrent GBM. Additionally, Mustang is excited about advancing the preclinical investigation of these two programs as the combination therapy MB-109 and plans to file an IND for this therapy this year. Concentrating our priorities and postponing the initiation of the MB-107 and MB-207 pivotal trials, along with maintaining a reduced headcount, reduces Mustang’s burn and extends our cash runway. This allows Mustang to allocate more resources to advance our lead clinical-stage programs and potentially expedite the achievement of several near-term milestones across our portfolio of product candidates for difficult-to-treat cancers,” said Dr. Litchman.
General Corporate
Mustang expects to incur severance charges related to the facility transaction of approximately $2.1 million, which Mustang expects will be offset by future annualized operating savings of at least $24 million including savings related to personnel, facility and clinical operations and optimization of the development portfolio. The Company also reduced annual interest expense by approximately $4.3 million in April 2023 after repaying and terminating its Loan and Security Agreement with Runway Growth Finance Corp.
About uBriGene (Boston) Biosciences Inc.
uBriGene (Boston) Biosciences Inc. is dedicated to providing one-stop viral vector-based CDMO services for research and clinical applications. It has established integrated innovative biologics CDMO platforms that provide GMP-level plasmid preparation, viral packaging, and T-cell production services for large-scale CAR-T productions. In addition, the company also provides viral vectors, including adenoviral and lentiviral vectors to meet the demands of research and/or manufacturing applications. With its fermentation capacity ranging from 5L to 500L, uBriGene offers a versatile selection of research-grade, GMP-ready, or GMP-grade plasmids for research and clinical applications respectively. uBriGene currently operates two state-of-the-art GMP facilities, including 21 clean suites with a total area of over 133,000 sq ft. For more information, visit www.ubrigene.com.
About Mustang Bio
Mustang Bio, Inc. is a clinical-stage biopharmaceutical company focused on translating today’s medical breakthroughs in cell and gene therapies into potential cures for hematologic cancers, solid tumors and rare genetic diseases. Mustang aims to acquire rights to these technologies by licensing or otherwise acquiring an ownership interest, to fund research and development, and to outlicense or bring the technologies to market. Mustang has partnered with top medical institutions to advance the development of CAR-T therapies across multiple cancers, as well as lentiviral gene therapies for severe combined immunodeficiency. Mustang’s common stock is registered under the Securities Exchange Act of 1934, as amended, and Mustang files periodic reports with the U.S. Securities and Exchange Commission (“SEC”). Mustang was founded by Fortress Biotech, Inc. (Nasdaq: FBIO). For more information, visit www.mustangbio.com.
Forward‐Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. Such statements, which are often indicated by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “look forward to,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions. The Company’s forward-looking statements, include, among others, statements about the Company’s expectations with respect to the consummation of the sale of its manufacturing facility and its ability to fund its operations, including continued investment in its research and development pipeline; the Company’s anticipated savings and expenses relating to the consummation of the sale of its manufacturing facility, the discontinuance of its MB-102, its CD123-targeted CAR T cell therapy, as well as its HER2-, CS1- and PSCA-targeted CAR T cell therapy programs, the postponing of the MB-107 and MB-207 pivotal trials and the related reduction in the Company’s workforce; and the Company’s plans and timeline regarding its XSCID program. Actual events or results may differ materially from those described in this press release due to a number of risks and
uncertainties. Risks and uncertainties include, among other things, risks related to the satisfaction of the conditions to closing the transaction—including the conditions specifically described in this press release—in the anticipated timeframe or at all; whether uBriGene is able to successfully perform its obligation to produce the Company’s products under the Manufacturing Services Agreement on a timely basis and to acceptable standards; whether the Company is able to raise $10 million in gross proceeds from equity raises following the closing of the transaction and receive the contingent portion of the consideration for the sale of the manufacturing facility to uBriGene; whether the Company’s expenses are as predicted; disruption from the transaction making it more difficult to maintain business and operational relationships; negative effects of the announcement or the consummation of the transaction on the market price of the Company’s common stock; significant transaction costs; the development stage of the Company’s primary product candidates and the related risks involved in drug development, clinical trials and the uncertainties around regulatory reviews and approvals; other business effects, including the effects of industry, market, economic, political or regulatory conditions; as well as other risks described in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K filed on March 30, 2023, subsequent Reports on Form 10-Q, and our other filings we make with the SEC. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as required by law, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Company Contact:
Jaclyn Jaffe
Mustang Bio, Inc.
(781) 652-4500
ir@mustangbio.com
Investor Relations Contact:
Daniel Ferry
LifeSci Advisors, LLC
(617) 430-7576
daniel@lifesciadvisors.com
Media Relations Contact:
Tony Plohoros
6 Degrees
(908) 591-2839
tplohoros@6degreespr.com